• A
  • A
  • A
  • ABC
  • ABC
  • ABC
  • А
  • А
  • А
  • А
  • А
Regular version of the site

We Must Reconsider the Government’s Role in the Economy

Slower GDP growth rates over the last several years were brought about by changes on international markets and the exhaustion of transformational bonuses due to the transition from a planned economy to a market economy, and this slowdown proves the necessity of looking for new solutions for stimulating the economy. The authors of the paper ‘Structural Changes in the Russian Economy and Structural Policy’ conducted a large-scale analysis on structural policy in Russia and around the world, as well as on possible ways for this policy to develop further. The first presentation of the paper took place as part of the plenary session called ‘Structural Policy in Russia: New Conditions and a Possible Agenda,’ which closed out HSE’s XIX April International Academic Conference.

‘We are not providing ready-made solutions or bothersome advice,’ Yuri Simachev, HSE’s Economic Policy Director, emphasised in his presentation. But now, the entire world is rethinking the government’s role in the economy, and the need for ‘smart policy’ is growing. Under these conditions, applying sensible measures of structural policy could not only significantly improve the investment climate, but also make a noticeable contribution towards economic growth.

The authors of the paper understand structural policy to be industrial policy in the broad sense – the actions of the government that are aimed at improving the business climate and improving economic activity structures in sectors that guarantee the best prospects for economic growth and the creation of social benefits. This is all in contrast to a lack of government intervention.

The paper analyses eight examples of when structural policy was applied in Russia on a larger scale. The authors note that a catch-up developmental policy was prevalent, a policy based on well-known technologies and approaches. The results ended up being fairly local and did not lead to robust growth. In order to carry out a structural policy, it is crucial to create an atmosphere conducive to the rapid distribution of technology, but there has not been significant progress in this area.

Another characteristic is the increased role of the government during times of crises, though as soon as economic growth resumes, the motivation to carry out structural policies declines considerably. Traditional growth factors were again relied upon heavily, but these are factors that involve significant risks when it comes to simulating activity and the results of this activity.

In addition, Yuri Simachev noted in his presentation that ‘absolutely no attention is paid, or it is paid exclusively in a demonstrative fashion’ to small- and medium-sized enterprises and high-tech companies. This leads to a situation in which all positive changes are disappearing at the micro-level. Temporary support measures become partially constant, and they bring about new and ineffective balance. Such significant difficulties are linked to insufficient administration. Russia has no culture of utilizing developments that already exist without trying to start fresh each time. Russia has no culture of transferring successful experiences immediately so that others can take advantage. Lastly, there is no culture for closing inefficient mechanisms. ‘We need to reform the system as a whole. The business climate has to change so it’s better aligned with the needs of growing companies, Simachev added.

The authors’ conclusions sparked a lively discussion. VEB Deputy Chairman Sergey Vasiliev noted that the government could not be a source of financing. ‘For this there has to be a stock market, and a way of supporting it has to be found,’ he said. In addition, more attention must be paid to carrying out foresight assessments so as to avoid massive and senseless spending on ill-chosen areas, which is what happened in the electricity sector.

As for business, the main difficulty with development concerns the position of the regional authorities. ‘The regions, excluding those leading in GRP growth, are not very interested in an active economic policy,’ added Maria Glukhova, the Vice President of Russian Union of Industrialists and Entrepreneurs.

RAS Academician Victor Polterovich reminded attendees that we cannot rely solely on our own experience. ‘Practically all successful countries used a specific system of institutions, creating a Federal Development Agency that stands above the government. The finance ministry, central bank, and economic development ministry in all countries have different goals and are unable to agree,’ he said. In addition, Polterovich believes Russia needs to establish a national planning system, work systematically on borrowing technologies, and create an intermediary between fundamental science and business in the form of design bureaus and research centres. ‘Each governmental enterprise has to have a mission – develop the entire industry and not just increase the budget,’ he concluded.

Ekaterina Shapochka, who is a member of the Russian government’s Expert Council, said that ‘with the government’s share of the economy at 70%, we are still having a dialogue with ourselves.’ A policy on small-and medium-sized entrepreneurship has still not been formed, and a roadmap on supporting technological entrepreneurship has not been approved. ‘The structure of the economy cannot be changed if the government doesn’t take measures to bring small business up to average European norms and develop the innovations sector,’ added HSE Academic Supervisor Evgeny Yasin.

‘This work sums up the preliminary results of developments that have been underway for many years, and this must absolutely be continued,’ HSE First Vice Rector Lev Jakobson said, closing the presentation.

'Structural Changes in the Russian Economy and Structural Policy' (PDF)

See also:

25th Yasin (April) International Academic Conference Now Accepting Proposals

Reports on new research results will be presented and discussed as part of the conference’s sections. These reports will be selected based on reviews of proposals. As always, the conference programme features expert discussions of the most pressing economic, social, internal and external issues in the format of roundtables and associated events.

Academic Council: HSE University’s Contribution to Achieving National Goals and Development Priorities to Increase

HSE University’s Development Programme until 2030 will be improved in order to increase the university’s contribution to achieving national goals and implementing the priorities of the country’s scientific and technological development. This decision was made by the university’s Academic Council on April 26. The meeting also addressed the principles for the development of HSE University’s external communications, one of which is the creation of a high-quality information field around the university.

Keeping Up with the Neighbours: Envy as a Driver of Economic Growth

Classical economic theory assumes that economic agents are entirely self-interested and rational in their pursuit of material well-being, and that they are not affected by external factors. As a result, externalities are not considered in any way when constructing economic models. Nevertheless, some sociologists argue for a revision of modern economic theory to incorporate the ethical dimensions of economic agents' behaviour. Kirill Borissov, Professor of the Faculty of Economics at the European University in St Petersburg, spoke at the XXIV Yasin (April) International Academic Conference and shared his observations from creating his own economic model incorporating the factor of envy.  

Structural Transformation and Drivers of Sustainable Growth in Russian Economy Discussed at HSE University

The Russian economy has demonstrated high resilience to unprecedented external pressure and has managed to largely adapt to new conditions. As early as this year, it can go from recession to growth. The issue of where to find drivers and resources for this was discussed at a plenary session titled ‘Russian Economy under Sanctions: From Adaptation to Sustainable Growth’ at the XXIV Yasin (April) International Academic Conference held at HSE University as part of the Decade of Science and Technology. Minister of Economic Development of the Russian Federation Maksim Reshetnikov took part in the discussion.

‘People Want to Receive Only Useful Content’

Experts say that interest in news has sharply increased among the Russian audience. At the same time, part of the audience deliberately avoids it. What kind of content is in demand and will people continue to watch TV? These and other issues were discussed at the plenary session ‘ Info-hygiene and Information Elitism: How to Consume Media Properly’ at the XXIV Yasin (April) International Academic Conference.

'The Emerging Trends in Africa Will Shape the World Order, and We Need to Be Prepared for That'

Africa has the potential to become a new economic giant. Today, African countries are interested in comprehensive cooperation and strengthening their positions in the global arena, and they look forward to receiving assistance from Russia and China in developing their technology, economy, and social sphere. Effective engagement with Africa requires training a greater number of professional African studies specialists. The XXIV Yasin (April) International Academic Conference at HSE University featured a plenary session on 'Africa in a Changing World'.

Learning a Foreign Language Can Delay the Onset of Dementia

Dementia, a debilitating form of cognitive impairment, can be preventable. According to Professor Jubin Abutalebi of the University Vita Salute San Raffaele, Italy, and the Arctic University of Tromsoe, Norway, the easiest way to prevent cognitive decline after the age of 60 is to learn and practice foreign languages – the more languages, the better, suggests Professor Abutalebi in his presentation 'Preventing dementia through bilingualism' at the XXIV Yasin (April) International Academic Conference.

‘The BRICS Strategic Partnership Offers the World Creative, Unifying, Forward-Looking Initiatives’

Today, BRICS has become an influential factor in modern international relations and is perceived as one of the pillars of a more just world order. This association is not based on one party’s dominance, but instead, is built on a sound balance of interests. The role of the association was discussed by the participants of the plenary session ‘BRICS Development Strategy: Equal Opportunities in an Unequal World’at the XXIV Yasin (April) International Academic Conference.

Sanctions Create New Opportunities for Russian Companies

Like any crisis, the sanctions of 2022, besides problems, have created new opportunities for Russian companies. This is the conclusion that HSE University’s experts have come to. Their study results are presented in the report ‘Adaptation of Russian Industrial Companies to Sanctions: First Steps and Expectations’, prepared by HSE University for the XXIV Yasin (April) International Academic Conference.

Search Query: How to Study Migration with Google Trends

Experts have calculated that the number of international students in Russia has grown six times over the last decade, and researchers say that many of those who are studying today would like to stay in the country. This, alongside issues such as why Google Trends are worth looking into, were covered at the HSE XXIV Yasin International Academic Conference on Economic and Social Development section on demography and labour markets.